Exports Matter to the States

Exports really matter.

“We must leverage federal resources to help statewide job growth. International trade is a true gateway to economic recovery,” Brooks Ohlson, director of the Northern California Regional Center for International Trade Development, said during a session of The Council of State Governments Western Region’s 64th Annual Meeting this week.

Panelists stressed the role increased exports can play in helping states create sustainable jobs and promote products already being manufactured within their boundaries.

Attendees explored President Obama’s National Export Initiative, which details his administration’s ambitious goal of doubling U.S. exports by 2015. Led by the Export Promotion Cabinet–comprised of the departments of State, Treasury, Commerce and Agriculture and other federal agencies with export portfolios – the export initiative seeks to facilitate entry into new and existing markets for small- and medium-sized American exporters.

Only 1 percent of U.S. companies export goods and services, said Suresh Kumar, assistant secretary of the U.S. Department of Commerce. Of those exporting companies, 58 percent export only to a single country.

U.S. exports as a whole represent 12.5 percent of U.S. gross domestic product, while countries such as Canada, China and Germany have exports accounting for 25 to 40 percent of GDP. The Obama administration believes that by improving these floundering U.S. export statistics, thousands of jobs could be created and sustained–and the key is tapping into small and medium-size companies, which comprise 97 percent of U.S. companies.

“In order to meet the goals of (National Export Initiative) and help grow the U.S. economy, we need to focus on innovation, education and commercialization,” said Kumar. “Appropriately educating students aids in innovation and innovation spurs a market-driven, competitive approach to connect U.S. companies, both small and medium, to the world. This can be achieved when state and federal government … work together.”

Many states are trying to work with the federal government through their own state-based initiatives. In June 2010, the state of Washington launched its own initiative to supplement the federal National Export Initiative. The six-point plan focuses on test piloting programs, providing assistance to first-time exporters, increasing competitiveness through award programs, attracting foreign students while also sending Washington students abroad for study, strengthening key international trading partnerships and seeking federal matching funds where available.

“We work closely with local governments across the states,” said Mark Calhoon, of the Washington state Department of Commerce. “We also focus on local training and capacity building, market the state, leverage non-state resources and partnerships and provide statewide leadership to the trade ecosystem.”

Washington’s focus on assisting companies, particularly small and medium-size businesses, has led to 8,000 Washington-based companies—4 percent of the state’s total—exporting goods and service, which also directly sustained 193,000 jobs. These exports–mostly driven by the aerospace industry, agriculture and the service sector–generated $76.1 billion. But this growth has not been without obstacles.

“One of our biggest challenges has definitely been marketing,” said Calhoon. “We’ve produced videos and set up the website ExportWashington.com to help get the word out that we are here to assist Washington-based businesses.“

State based trade offices like Calhoon’s program in Washington, also can find support through one of The Council of State Governments’ affiliate organizations, the State International Development Organizations. SIDO, under the leadership of Sasha Sutcliffe-Stephenson, is dedicated to supporting state international trade agencies by focusing exclusively on international trade development.

“It’s a challenging world and many risks are involved, such as intellectual property theft and potential monetary loss,” says Sutcliffe-Stephenson. “That’s why the state-sponsored programs are so important and SIDO helps those state programs navigate the export process.”

Sutcliffe-Stephenson also pointed out that National Export Initiative represents the first time the U.S. federal government has placed a high priority on exports. “Recent federal statistics illustrate that there is currently a 40-to-1 return on investment for every $1 put into exports. Some states such as Pennsylvania realize an even greater return”